• Amanda Renwick, Globally Mobile HR

Is Deferred Retirement an Option in the South African Market to Ensure Knowledge Transfer of Retiree

During the last 12-18 months I have been working increasingly with retirees and employees about to retire. Mainly coaching around the change from full time employment to retirement, finding a purpose and additional methods of income when employees retire. It is a big transition.

The main recurring theme from these interactions is that I am not ready? What if …..? and for those that have retired, after the first few months of sleeping late, holidays at the beach and fixing up the house and clearing out – what next?

The biggest complaint was that employers hadn’t done enough to help them transition from work to retirement. Maybe the financial nuts and bolts part of retirement, but not the emotional change.

The second biggest complaint was that their employers didn’t do a good knowledge transfer and they were concerned about their old company.

These two concerns are confirmed by the US 2018 Harris Poll in which more than half of retirees polled (54%) wished employers offered more help for them to transition to retirement. Could retirement be phased in rather than full time work today, full time retirement tomorrow?

So, what is phased retirement?

The implementation varies company to company, but generally it is where an employee, close to retirement begins to reduce their hours, moving from full time, to part time to retirement, or if they are retired, they stay on in a reduced hours capacity to assist their successor. This can happen a number of ways depending on the role and the team the role is in.

The benefits for the employee including learning to figure out what do with the extra time and getting used to a lower salary.

The benefits to the company are knowledge transfer, mentoring opportunities, job shadowing for the successor as part of the succession plan and knowledge transfer plan.

The loss of institutional knowledge to an organisation when retirees leave without a knowledge transfer plan is in place is huge and is often only recognized when it is too late. Dorothy Leonard, a Harvard Business School professor calls it “the stuff in your head that has never been written down, never been documented or articulated” work that is done automatically, people you know who to call to resolve issues.

In the Harris Poll mentioned above:

  • 57 percent of retirees have shared half or less of the knowledge needed to perform their job responsibilities with those who will assume them after they retire

  • 21 percent have shared none of their knowledge

  • Only 18 percent have shared all of their knowledge

“Such a poor transfer of knowledge was surprising to us,” said Bill Stoller, CEO of Express Employment Professionals. “You’ve got to have a process in place to have someone follow in the footsteps of someone retiring. It doesn’t appear companies are thinking about that.

Some companies don’t believe they need knowledge transfer as things change so fast the information gets outdated quickly, but the majority of companies are acknowledging a brain drain that can’t be solved by googling the problem or the solution.

Not all companies are struggling with this dilemma.

Duke Energy, the largest regulated utility in the United States, is taking the retiree brain drain seriously, with a variety of initiatives. The goal: to ensure younger workers learn what older ones have picked up over the years. Duke Energy managers have been asked to create knowledge-transfer plans for their team members closing in on retirement; some have shot videos to do so. New staffers sometimes shadow older ones, too.

An article on the SHRM (Society for Human Resource Management) site notes that Siemens, the U.S. subsidiary of the Germany-based global manufacturing and electronics firm Siemens AG, is also making knowledge transfer a priority. That makes sense: 34 percent of its employees are boomers and 43 percent are Gen Xers, coming up right behind them.

Siemens partnered with Clemson University to fund a three-year undergraduate research project to transfer institutional knowledge from its boomer workers to its millennials (who comprise 23 percent of its workforce). The company now combines job shadowing, mentoring and formal training. But “no more death by PowerPoint,” an HR exec told SHRM. Millennials, Siemens learned, don’t want to be talked to sitting in a conference room. They want a conversation.

GM has an internal mentor portal to help transfer wisdom. And Michelin North America offers senior employees phased retirements, allowing them to gradually wind down through part-time work, training younger staffers while they do.

Bill Stoller of Express Employment Professionals said that his company has been working hard at knowledge transfer, too. For instance, one of its regional vice presidents was shadowed by a successor for six months before the VP retired in December. Another retiree there is being kept on payroll as a consultant for the next year or so. That way, the person taking over will be free to give the retiree a call anytime and the consultant will assist the firm when necessary.

“That’s what companies are going to have to do,” Stoller said. The sooner, the better, he added.

Include a retiree’s successor in meetings with key clients and vendors a long while before the retirement day comes. Have a succession plan procedure in place that all employees understand. Doing these kinds of things avoids that awful day when workers realize the only person who knows something or has a key business relationship is no longer employed with them and they’re on their own.

Would this work in South Africa?

The new Retirement Benefit Consultation amendment to the Pension Funds Act requires employees be counselled about retirement when they join a company, three months before they retire and when they retire? Sadly this counselling is a financial session, not about the emotional side of retirement. So could a phased retirement approach work to fulfil the spirit of the RBC if not the letter of the Act?

Phased retirement has benefits for both the employee and the employer but is it not always straightforward to implement as it is linked to retirement and succession programmes, which means both those programmes may need to be tweaked/changed to allow alignment. For those companies with active mentoring programmes, phased retirees can add a lot of value.

A couple of examples are Pat and Yvonne.

In Pat's case, the medium sized company she worked for was slowly bringing in more automation. Pat did office admin, book- as well as overflow work for her peers. In her case, she moved from 5 to 4 days per week for 3 months. Then another 6 months at 3 days per week, occasionally there was overtime, but with some planning, her workload, work times were aligned with the new modules. By the time the new system was in and 100% function, she retired. For companies automating systems, this process can be done for retirees and even in retrenchment. Retrenchment can also be a phased process.

In Yvonne's case, when she retired there was no succession plan in place. There were candidates but no one was ready for her role. She remained after retirement during 3 days per week for 6 months, handing over to her successor, then 3 months at 1 day per week mentoring her successor and the team.

In both cases this type of phased retirement was beneficial for the company and the employee.

Companies who strategically manage workforce planning will find this far easier to implement than those who rely on the retrench and recruit method of employment.

Flexibility is the key. If your company has an active succession plan, see how phased retirement plan can fit into this. Like succession planning this will need to be a bit different from person to person and from division to division. Phased retirement is not a one size fits all solution and with all policies will need to change over time, so don’t be scared to change it. With four generations in the workplace what works for your boomers, may not work when its time for Gen X to retire.

Phased retirement is a great option for companies who want to ensure knowledge transfer is successful, successors succeed and at the same time helping staff gradually move into retirement without the social, financial and emotional stress that can come with a quick and abrupt switch from full time employment to full time retirement but it is possible. Give it a try.


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